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Back to the Future: International Trade Costs and the Two Globalizations

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  • Michel Fouquin
  • Jules Hugot

Abstract

This article provides an assessment of the nineteenth century trade globalization based on a systematic collection of bilateral trade statistics. Drawing on a new data set of more than 1.9 million bilateral trade observations for the 1827-2014 period, we show that international trade costs fell more rapidly than intra-national trade costs from the 1840s until the eve of World War I. This ï¬ nding questions the role played by late nineteenth century improvements in transportation and liberal trade policies in sparking this First Globalization. We use a theory-grounded measure to assess bilateral relative trade costs. Those trade costs are then aggregated to obtain world indices as well as indices along various trade routes, which show that the fall of trade costs began in Europe before extending to the rest of the world. We further explore the geographical heterogeneity of trade cost dynamics by estimating a border effect and a distance effect. We ï¬ nd a dramatic rise in the distance effect for both the nineteenth century and the post-World War II era. This result shows that both modern waves of globalization have been primarily fueled by a regionalization of world trade.

Suggested Citation

  • Michel Fouquin & Jules Hugot, 2016. "Back to the Future: International Trade Costs and the Two Globalizations," Vniversitas Económica 015130, Universidad Javeriana - Bogotá.
  • Handle: RePEc:col:000416:015130
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    References listed on IDEAS

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    Cited by:

    1. Jules Hugot & Camilo Umana Dajud, 2016. "Trade costs and the Suez and Panama Canals," Working Papers 2016-29, CEPII research center.
    2. Gino Gancia, 2014. "Globalization and Political Structure," 2014 Meeting Papers 644, Society for Economic Dynamics.
    3. Aksoy, Cevat Giray & Guriev, Sergei & Treisman, Daniel, 2018. "Globalization, Government Popularity, and the Great Skill Divide," CEPR Discussion Papers 12897, C.E.P.R. Discussion Papers.
    4. David S. Jacks & Kevin Hjortshøj O'Rourke & Alan M. Taylor, 2020. "The Gravitational Constant?," Oxford Economic and Social History Working Papers _184, University of Oxford, Department of Economics.
    5. Michel Fouquin & Jules Hugot, 2016. "Two Centuries of Bilateral Trade and Gravity data: 1827-2014," Vniversitas Económica 015129, Universidad Javeriana - Bogotá.
    6. Edwards, T. Huw & Lücke, Matthias, 2021. "Decomposing the growth of the high-skilled wage premium in an advanced economy open to trade," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 766-784.
    7. Paul Girard & Beatrice Dedinger, 2018. "RICardo World Trade Web, 1834-1938," Sciences Po publications info:hdl:2441/6h7io1v56e8, Sciences Po.
    8. Adam, Marc Christopher, 2019. "Return of the tariffs: The interwar trade collapse revisited," Discussion Papers 2019/8, Free University Berlin, School of Business & Economics.

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    More about this item

    Keywords

    Globalization; Trade costs; Border effect; Distance effect;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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